Allbirds: Consumers Will Pay Full Price for ‘Fresh’ Enough Products


Economic challenges have consumers pulling back on full-priced purchases, but Allbirds maintains that, if products are novel and relevant enough, shoppers will spring for non-discounted goods.

On a call with analysts Wednesday (May 8) discussing the footwear and apparel company’s first-quarter 2024 financial results, CEO Joe Vernachio said the company is pulling back on deals and discounts, trusting that consumers will stay engaged if the products are compelling enough.

“After a year of promotional activity, we recognize this shift will create near-term impact to sales, but we know it’s the right decision for long-term health of the brand,” Vernachio said. “Going forward, you can expect to see … limited promotions connected to consumer-driven moments throughout the year. As we start to deliver a more robust offering of fresh, updated product later this year, we believe the consumer will respond.”

Yet consumers are looking for deals. The PYMNTS Intelligence report “Personalized Offers Are Powerful — but Too Often Off-Base,” which drew on responses from more than 2,500 U.S. consumers, found that 83% of shoppers were interested in receiving personalized offers.

Additionally, PYMNTS Intelligence’s study last year, “Consumer Inflation Sentiment Report: Higher Prices Fuel a Deal-Seeking Competition,” which drew from a survey of more than 2,100 U.S. consumers, found that 46% of retail shoppers are deal chasers, primarily motivated by where they will get the best bargain. Plus, 72% of retail shoppers overall said price and discounts influenced their decision of where to make their most recent purchase.

Still, Allbirds is optimistic about its ability to retain its shoppers based on the strength of its products.

“Starting in January, coming off of liquidating our inventory and getting our inventory healthy last year, I’m really happy with the results that we’ve seen returning back to full price and bringing back our customer as a full-price customer,” Vernachio said.

In the quarter, revenue dropped 28% year over year, while inventory was down 45%.

Looking ahead, the company is looking to external retailers and marketplaces to drive consumer adoption. Vernachio spoke to the company’s “long-term game plan to strengthen … relationships” with retailers such as Dick’s Sporting Goods, Nordstrom and REI as well as to establish a foothold on Amazon.

“The decision to add Amazon as an additional digital marketplace last year is bearing fruit and outpacing our expectations,” he said. “This is a profitable extension of our reach and allows Allbirds to meet our customers where they are.”

Indeed, consumers prefer to buy shoes from retailers and marketplaces. Supplemental research from the PYMNTS Intelligence report “The Online Features Driving Consumers to Shop With Brands, Retailers or Marketplaces” reveals only 9% of consumers purchase most of their clothing and accessories via direct-to-consumer (D2C) channels, while 12% do so from retailers’ digital channels, 27% do so from eCommerce marketplaces, and 49% do so in physical stores.

Plus, the Amazon opportunity is indeed sizable. A PYMNTS Intelligence survey of nearly 2,700 U.S. consumers conducted last year revealed that 61% of U.S. consumers were Amazon Prime members.